15.1 Introduction
A striking feature of many modern businesses is the extent to which they are inter-
national in one or more aspects of their activities. Take, for example, Cadbury
Schweppes plc, which specialises in making confectionery and soft drinks. This is
ostensibly a UK business, to the extent that its head office is in London and its shares
are listed, and principally traded, on the London Stock Exchange. According to the
business’s 2006 annual report, however:
l about 88 per cent of its employees are based outside the UK;
l about 85 per cent of its turnover is made outside the UK;
l about 89 per cent of its non-current (fixed) assets are located outside the UK;
l it has manufacturing plants in 36 different countries, in many parts of the world, as
well as in the UK;
l some of its production, both UK and overseas, is exported to countries outside the
country of manufacture;
l it obtains much of its raw materials from outside the countries of manufacture;
l a large part of its long- and short-term borrowing is from outside the UK; and
International aspects of
business finance
In this chapter we shall deal with the following:
‘the nature of international business
‘foreign exchange markets
‘theories and evidence on exchange rate relationships
‘exchange rate, economic and translation risk
‘foreign investment
‘modern portfolio theory and risks of internationalisation
Chapter 15